Working Paper: NBER ID: w2354
Authors: Alberto Alesina; Stephen E. Spear
Abstract: This paper presents a dynamic model of political competition between two "parties" with different policy preferences. A "party" is explicitly modeled as a sequence of overlapping generations of candidates, all of whom face finite decision horizons. In general, there is a conflict between the interests of the individual policymakers and those of the "party" , which includes subsequent generations of candidates. We characterize this conflict and suggest a scheme of "intergenerational transfers" within the party which can resolve or mitigate this conflict. The paper shows how the "overlapping generations" model can be usefully applied to the political arena.
Keywords: electoral competition; overlapping generations; political economy
JEL Codes: D72; H40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual policymakers (D78) | suboptimal outcomes (I14) |
| lack of credible precommitment mechanisms (D82) | individual policymakers prioritize immediate preferences (D01) |
| intergenerational transfers (D15) | alignment of individual incentives with party goals (L21) |
| intergenerational transfers (D15) | policies more beneficial for the party and society (P35) |